Tuesday, July 10, 2012

Registrar of Companies and the Right to Information Act

In the past, there has been some discussion on whether the concept of right to information should be extended to the corporate sector or not, but presently it applies only to a “public authority”. At most, it might include government companies as the definition of a “public authority” includes “any ... body owned, controlled or substantially financed ... directly or indirectly by funds provided by the appropriate Government”.
The next question is whether the Right to Information Act, 2005 (RTI) can be utilised to obtain information regarding specific companies that may be available with the Registrar of Companies (RoC). Under the Companies Act, 1956, companies are required to make several filings with the RoC. Moreover, under section 610 of the Companies Act, any person may seek to inspect records at the RoC, and also obtain copies or extracts of documents for payment of a fee.
The question as to whether a person may access the RTI Act to obtain records from the RoC rather than through the inspection provision under the Companies Act, 1956, was the subject matter of a dispute that was decided by the Delhi High Court in Registrar of Companies v. Dharmendra Kumar. In that case, the Delhi High Court ruled in favour of the RoC that denied access under the RTI Act on the ground that the Act was unavailable to applicants when the same right could be exercised through inspection under section 610 of the Companies Act. The court observed:
23. There can be no doubt that the documents kept by the Registrar, which are filed or registered by him, as well as the record of any fact required or authorized to be recorded by the Registrar or registered in pursuance of the Companies Act qualifies as ―information‖ within the meaning of that expression as used in Section 2(f) of the RTI Act. However, the question is  — whether the mere fact that the said documents/record constitutes ―information‖, is sufficient to entitle a citizen to invoke the provisions of the RTI Act to access the same?
35. The mere prescription of a higher charge in the other statutory mechanism (in this case Section 610 of the Companies Act), than that prescribed under the RTI Act does not make any difference whatsoever.  The right available to any person to seek inspection/copies of documents under Section 610 of the Companies Act is governed by the Companies (Central Government’s) General Rules & Forms, 1956, which are statutory rules and prescribe the fees for inspection of documents, etc. in Rule 21A.  The said rules being statutory in nature and specific in their application, do not get overridden by the rules framed under the RTI Act with regard to prescription of fee for supply of information, which is general in nature, and apply to all kinds of applications made under the RTI Act to seek information.  It would also be complete waste of public funds to require the creation and maintenance of two parallel machineries by the ROC – one under Section 610 of the Companies Act, and the other under the RTI Act to provide the same information to an applicant.  It would lead to unnecessary and avoidable duplication of work and consequent expenditure.
The Court was also confronted with the question as to whether there is any inconsistency between the RTI Act and the Companies Act, which it answered to the negative. It reasoned as follows:
42. Firstly, I may notice that I do not find anything inconsistent between the scheme provided under Section 610 of the Companies Act and the provisions of the RTI Act.  Merely because a different charge is collected for providing information under Section 610 of the Companies Act than that prescribed as the fee for providing information under the RTI Act does not lead to an inconsistency in the provisions of these two enactments.  Even otherwise, the provisions of the RTI Act would not override the provision contained in Section 610 of the Companies Act. Section 610 of the Companies Act is an earlier piece of legislation.  The said provision was introduced in the Companies Act, 1956 at the time of its enactment in the year 1956 itself.  On the other hand, the RTI Act is a much later enactment, enacted in the year 2005.  The RTI Act is a general law/enactment which deals with the right of a citizen to access information available with a public authority, subject to the conditions and limitations prescribed in the said Act.  On the other hand, Section 610 of the Companies Act is a piece of special legislation, which deals specifically with the right of any person to inspect and obtain records i.e. information from the ROC.   Therefore, the later general law cannot be read or understood to have abrogated the earlier special law.
While I am somewhat sanguine about the conclusion arrived at by the court in the context of the Companies Act, Prashant Reddy provides a critique of the judgment on the Law and Other Things Blog and points to the dangers of overextending this principle.
Hat-tip: Law and Other Things

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